SOL, which state?

SOL, which state?

Hi all,

I've tried doing some digging in older forum topics but haven't found a good answer to this question, so I'm sorry if it's redundant.

I am being sued by Portfolio Recovery, who bought an old Amex debt that I believe to be out of SOL (Portfolio has reported a couple different DOFD on my credit reports, but that's another story...). I am seeing in Amex's cardholder agreement that they have a "Governing Law" clause that states that the agreement is governed by Utah law. Does this also affect SOL (it is 4 yrs in UT, and I'm in MI where it is 6 yrs)? Here is the verbage:

"Utah law and federal law govern this Agreement and your Account. They govern without regard to internalprinciples of conflicts of law. We are located in Utah. We hold your Account in Utah. We entered into thisAgreement with you in Utah."

Does this mean I am able to claim it is out of SOL based on Utah law, or would MI law still apply?

Re: SOL, which state?

SamuelLCatson wrote:

Hi all,

I've tried doing some digging in older forum topics but haven't found a good answer to this question, so I'm sorry if it's redundant.

I am being sued by Portfolio Recovery, who bought an old Amex debt that I believe to be out of SOL (Portfolio has reported a couple different DOFD on my credit reports, but that's another story...). I am seeing in Amex's cardholder agreement that they have a "Governing Law" clause that states that the agreement is governed by Utah law. Does this also affect SOL (it is 4 yrs in UT, and I'm in MI where it is 6 yrs)? Here is the verbage:

"Utah law and federal law govern this Agreement and your Account. They govern without regard to internalprinciples of conflicts of law. We are located in Utah. We hold your Account in Utah. We entered into thisAgreement with you in Utah."

Does this mean I am able to claim it is out of SOL based on Utah law, or would MI law still apply?

Thanks a bunch!

Third party debt collectors are required by federal law to bring any action against you in the state of your primary residence. In your case that would be Michigan.

Re: SOL, which state?

Since they bought the debt and have no affiliation with Amex, are they still considered a third party? I know (after talking w/ someone who works in Licensing debt for the state) that they no longer have to follow the same rules in terms of being licensed, etc here in MI because they are a debt buyer and took over the account entirely.

Re: SOL, which state?

SamuelLCatson wrote:

Since they bought the debt and have no affiliation with Amex, are they still considered a third party? I know (after talking w/ someone who works in Licensing debt for the state) that they no longer have to follow the same rules in terms of being licensed, etc here in MI because they are a debt buyer and took over the account entirely.

The fact that they bought the debt is what makes them a third party collector. Only the original creditor can invoke the terms of the agreement you entered into with them. Once the debt is charged off and sold, FDCPA comes into effect, and the collector is bound by the terms of that law (and any more restrictive state laws in your state of residence which may be in effect).

The only ways that a debt collector can bring suit against you in a state in which you do not live are:

Disputes involving real property, which must be brought in the state in which the property is located (for obvious reasons)

Disputes arising from signed contracts (which typically do not exist in revolving debt). Signed contracts can be actioned in either the state in which you live or the state under whose law you signed the contract.

Now, bear in mind that FDCPA doesn't prevent the collector from trying to bring suit. It just gives you defenses to use in response. You (or your attorney) still have to show up or you risk default judgment. In your case, Portfolio will have to bring suit against you in Michigan, and both FDCPA and Michigan law will apply. The SOL begins to run from the date of constructive default with the ORIGINAL CREDITOR. Do not make any sort of offer to pay, etc. as these can potentially restart the clock depending on the laws in your state.

Re: SOL, which state?

Elcid89 wrote:

SamuelLCatson wrote:

Since they bought the debt and have no affiliation with Amex, are they still considered a third party? I know (after talking w/ someone who works in Licensing debt for the state) that they no longer have to follow the same rules in terms of being licensed, etc here in MI because they are a debt buyer and took over the account entirely.

The fact that they bought the debt is what makes them a third party collector. Only the original creditor can invoke the terms of the agreement you entered into with them. Once the debt is charged off and sold, FDCPA comes into effect, and the collector is bound by the terms of that law (and any more restrictive state laws in your state of residence which may be in effect).

The only ways that a debt collector can bring suit against you in a state in which you do not live are:

Disputes involving real property, which must be brought in the state in which the property is located (for obvious reasons)

Disputes arising from signed contracts (which typically do not exist in revolving debt). Signed contracts can be actioned in either the state in which you live or the state under whose law you signed the contract.

Now, bear in mind that FDCPA doesn't prevent the collector from trying to bring suit. It just gives you defenses to use in response. You (or your attorney) still have to show up or you risk default judgment. In your case, Portfolio will have to bring suit against you in Michigan, and both FDCPA and Michigan law will apply. The SOL begins to run from the date of constructive default with the ORIGINAL CREDITOR. Do not make any sort of offer to pay, etc. as these can potentially restart the clock depending on the laws in your state.

Interesting. This isnt my area of practice so I know next to nothing about FDCPA. My gut instinct tells me that if someone buys a contract they are subject to the terms of that contract. So if the contract had a choice of law provision they would be bound by that provision and in this case have to apply the SOL of that given state. (maybe since they are buying the charged off debt they are actually buying the debt and not the contract and that may lead to different result.) This is definitely something you need to talk about with your attorney. Let me know how it goes.

Re: SOL, which state?

Duncanrr wrote:

Elcid89 wrote:

SamuelLCatson wrote:

Since they bought the debt and have no affiliation with Amex, are they still considered a third party? I know (after talking w/ someone who works in Licensing debt for the state) that they no longer have to follow the same rules in terms of being licensed, etc here in MI because they are a debt buyer and took over the account entirely.

The fact that they bought the debt is what makes them a third party collector. Only the original creditor can invoke the terms of the agreement you entered into with them. Once the debt is charged off and sold, FDCPA comes into effect, and the collector is bound by the terms of that law (and any more restrictive state laws in your state of residence which may be in effect).

The only ways that a debt collector can bring suit against you in a state in which you do not live are:

Disputes involving real property, which must be brought in the state in which the property is located (for obvious reasons)

Disputes arising from signed contracts (which typically do not exist in revolving debt). Signed contracts can be actioned in either the state in which you live or the state under whose law you signed the contract.

Now, bear in mind that FDCPA doesn't prevent the collector from trying to bring suit. It just gives you defenses to use in response. You (or your attorney) still have to show up or you risk default judgment. In your case, Portfolio will have to bring suit against you in Michigan, and both FDCPA and Michigan law will apply. The SOL begins to run from the date of constructive default with the ORIGINAL CREDITOR. Do not make any sort of offer to pay, etc. as these can potentially restart the clock depending on the laws in your state.

Interesting. This isnt my area of practice so I know next to nothing about FDCPA. My gut instinct tells me that if someone buys a contract they are subject to the terms of that contract. So if the contract had a choice of law provision they would be bound by that provision and in this case have to apply the SOL of that given state. (maybe since they are buying the charged off debt they are actually buying the debt and not the contract and that may lead to different result.) This is definitely something you need to talk about with your attorney. Let me know how it goes.

Consider yourself lucky. Contracts and UCC are the bane of my daily existence.

The key point of consideration is "signed". FDCPA approaches contractual debt like UCC does - defined obligations entered into under seal with specified repayment terms and a finite horizon of performance. In other words, promissory notes. Contracts can't be altered without the consent of all signatories - in other words an original creditor can't assign its interest to an uninvovled third party without the consent of all parties.

Now, this is typically addressed (when it is addressed, which isn't often and usually only in the context of a mortgage) by an assignment clause written into the contract in which the obligee consents to assignment. Otherwise, contracts can not be assigned. They can only be dissolved or breached.

Revolving / open ended debt doesn't meet the definition of a contract for the purpose of FDCPA, as well as for the purpose of the laws of most states (especially those which have adopted UCC). It's open-ended debt, not contractual debt / promissory notes.

In other words, with an assignable contract, such as a mortgage, the assignee assumes the role of the original creditor. They are stepping into the shoes, as my contracts prof repeated over and over again. FDCPA doesn't apply. UCC does.

Re: SOL, which state?

Gotcha. I deal with contracts but under Louisiana law. LA law has some different applications than UCC in many respects and havent had to dwell too much into UCC (at least not since bar exam )

Very much so. Louisiana is its own little world, or so I've heard. Napoleonic Code vs. common law origins. I deal with Maryland and DC. Louisiana also explicitly rejected Article 2 of the UCC, which covers what we're dealing with here.

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FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.